Asia, too, feels the pain.

No single day will pass without some bad news of a bank getting in trouble caused by American mortgage-backed securities. But what about the Asian economies? Did they get in trouble despite the facts that they have $3 trillion in foreign currency, well capitalized banks that are hardly interested in those corrupted American bank products?

Unfortunately yes. Real estate prices are going down from Seoul to New Delhi. Singapore’s economy just entered a recession and some indicators even announce a coming recession in Japan.
What could be the cause that those growing economies gets into trouble?

Well, a important reason is the fact that all those countries depend heavily on our western dollars and euro’s. And now we, the west, are in the middle of a recession. We do not longer import as much as we did before. India for example announced that they growth was limited with only a +1.3%. Some people will say that’s still a good result in this worldwide crisis. It is, but when you know their growth was +7.4% in July you see that also they suffer from it.
It’s sad that the employees of those small companies they job get threatened due to our bank problems.

Who could help them with financial injections, loans etc? Surely not the United states since they already have difficulties in saving their own economy. So more and more people look toward China. China always was and still is an enormously powerful hound that charged ahead every obstacle on its way. Maybe China can confirm its status as a economical super power, equal or maybe even better then the US.

Source: http://www.iht.com/articles/2008/10/10/business/asiaecon.php

Japan agrees funding and tax cuts

On Monday the 29th of September, the BBC published an article about the newest financial plans of the Japanese government.

The Japanese government agreed to provide 1.81 trillion yen or 17 billion US Dollar to stimulate the Japanese economy. The Japanese economy is on the brink of a recession. It’s also very interesting for the inhabitants because it will cope the high energy and food prices in the country.They also promised the Japanese people tax cuts before the end of the fiscal year in March 2009.


The Japanese prime minister, Taro Aso, thinks to achieve an economic recovery and he also tries to help the (poor) people in his country. It’s also good for the country itself and the local economies.

I think that it’s a good idea of the prime minister because he wants to avoid a national recession. He tries to help the Japanese economy and the inhabitants, that is a very positive fact. On the other hand, I think that 17 billion US Dollar is a lot of money! The question is if it’s really doable to spend that amount of money to save the economy!? If they really are able to find that amount of money it would give the local economy a real boost!





source: http://news.bbc.co.uk/2/hi/asia-pacific/7641164.stm

Power Plants

India has a new product , a product that will give their economy a extra boost and help them to create extra jobs. Jatropha is a plant that can be transformed into biodiesel. This plant is not only good for India, but also for the world economy. The demand for fuel is still growing and with this alternative maybe the demand will decline. The government also believes in this new project and is investing in this sector. The Jathropha is not they only plant that they can use for biodiesel, they have another one. There is also one negative side of these plants, the crops take too long to bear fruit and the sole of the field are unreliable. This may not discourage the Indian government to invest in this project because it is a good project. We need to find alternatives for oil and this is a very good alternative. They have certainly the knowledge to develop this project. The best technicians and IT people come from India. They have enough space to develop it, so that won’t be a problem. Financially is it also not a problem, India has a lot of capital. To conclude the Indian economy is the best working economy of the moment, but like most economies they have a few defaults like inflation. They’re becoming more stronger and their spreading their knowledge over the world.

Source : http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=6899464&story_id=12270974

Junot Roegiers

The big boys are back

About 10 years ago, Japan was a bad country on the field of finances, now they are working on their comeback on the financial world market. Some big companies are engaged in buying shares of big American banks. Nowadays it's easy for the big Japanese banks to buy shares of banks or even the whole bank because of the bad situation on the financial market in Europe and Amercia.
The Japanese banks are well known in their own country but for us they are still unknown.
In every take over you have a little bit problems even in this case because Japan and Amercia have two different cultures. But the thing that Japanese banks can do best is to deal with hard and difficult situations and now they have to prove it.

I found it a good strategy of the Japanese banks to buy as much shares and banks in America (maybe in Europe) as they can because now they have to pay less for everything and the banks in America are more or less out of the problems. I hope for the Japanese banks and also a little bit for the American banks, that they can help the Americans and don't become a bad player on the market again. Because then there will be a bigger disaster than now. But I hope that they do not take over my bank because I don't trust them, I can't explain why I don't trust them but it's a feeling.

source: http://www.economist.com/finance/displaystory.cfm?story_id=12306044

Japan posts a rare trade deficit

In August, the Japanese trade gap slipped into the red. Japan is on the edge of a recession.
The reasons for the failing economy are the falling export and domestic demand. Because of the rising prices of oil, coal and natural gas, the Japanese governement has to pay more for the products they have to import.
The other problem they have is that their export doesn't grow proportionate with the cost of the import, so they lose a lot of money. The reason for that is the falling demand of Japanese cars. And it isn't Japan only that have problems with their economy but also overseas.It was since 1980 that Japan has have so much economical problems.

I think the only solution for the problems that Japan and the overseas areas have is to reduce the price of the oil and the raw materials in general so that the imports costs will going down
The governements of the US and the European countries could raise the purchasing power of the people so that there (probably) will be more demand of Japanese cars and the export of Japan will raise. Only the governements can help Japan, they have to take measures to help Japan and the world in general.

I also think that the problems, that Japan has, also hit other countries. Especially now because the financial world become weaker and weaker and soms people have already lost their money so I personaly think that the economical crisis doesn't stay only in Japan but will spread out.




source:
http://news.bbc.co.uk/2/hi/business/7635265.stm

Why China's milk industry went sour

On the 17th of September, the Chinese government found a dangerous chemical (melamine) in the milk products. Factories of dairy products added this chemical to mislead quality tests and artificially increase the price of their milk. Resulting in thousands of ill babies and damaging the reputation of the Chinese economy. Sadly enough some people say this news was already discovered during the Olympics, but China didn’t want to broadcast bad publicity during this very important happening.

In my opinion, this has to do with the fact that the Chinese economy focuses on producing cheap mass products instead of creating new innovative quality goods. They try everything to cut down the costs so their goods are still cheap enough to be sold abroad. Also the greed of big companies that want to gain more profit is an important factor. The poor farmers aren’t assembled in unions nor do they have the influence to be heard by higher authorities.

For the future, I think this won’t happen anymore because I consider this as a failure/flaw of the control system that isn’t enough developed yet due to the fast growing economy. And to quote the Chinese premier Wen Jinbao: “As head of the government I feel deeply grieved. But the most important thing is to draw a lesson from it”. If you look back at our own economical history, the most important lessons are also learned after critical periods.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7635466.stm

Brecht Zegers

China gloats as financial tsunami on Wall Street continues

On the 18th of September, the English newspaper, The Daily Mail published an article concerning the financial crisis in Wall Street, in the United States.
The author of the article mentions that China is using the financial crisis in the United States to show the world that we can not longer be dependent from just one big economic nation, that tries to rule everything, like the United States.
The former central bank Deputy Governor, Wu Xiaoling, said US regulators weren’t able to manage all the financial risks and China needs to learn from those mistakes in the United States to avoid such a crisis, or even bigger, in their own country.

I think that what the author mentions is right. We should not be so dependent from the United States like we are now. We also have a financial crisis in the US dependant countries. It would be better if we had a financial system that's not based on the US only. Diversification would be better, since no investor would invest all his money in one company, why should the big banks do it then? Look what happened in Belgium, the big crisis concerning Fortis and Dexia. The cause of that crisis is partial to blame on the financial crisis in the United States. Now the Belgian government had to give money to the two concerning banks to save them from bankrupt. Otherwise there would be a lot of people that lose their money.
So I think that it’s very important to have an diversification on the financial market, just like China claims.


Source: http://www.dailymail.co.uk/money/article-1057523/China-gloats-financial-tsunami-Wall-Street-continues.html